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Departure Tax: What Happens to Your Taxes When You Leave Canada

August 28, 2026
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You Are Treated as Having Sold Almost Everything on the Day You Leave

When you stop being a tax resident of Canada, CRA treats you as if you sold almost everything you own at fair market value on your departure date, and then bought it all back at the same price. You pay tax on the resulting capital gains even though you did not sell a thing and no money changed hands.

That is departure tax. It is not a separate tax with its own rate, it is the same capital gains tax that applies when you sell a property or investment, charged on gains you have not actually realized yet.

The short version of what follows:

Caught: stocks and ETFs in non registered accounts, crypto, shares of private companies, foreign real estate, jewellery, art, collectibles.
Not caught: Canadian real estate, RRSPs, RRIFs, TFSAs, RESPs, RDSPs, and Canadian business property held through a permanent establishment here.
You must file two extra forms with your final return: T1161 if your property was worth more than $25,000, and T1243 to report the deemed sale.
You can defer the payment using form T1244, with no interest running, until you actually sell. Security is required if the federal tax owing exceeds $16,500.
The T1161 penalty is $25 a day, up to $2,500, and it applies even if you owe no tax at all.

The single most useful thing to understand: departure tax is highly manageable if you plan the date and the order of things, and expensive if you find out about it in April of the following year. Almost every horror story in this area is a timing story.

When You Actually Become a Non Resident

Departure tax is triggered by a change in residency, and residency is not about your passport, your citizenship, or how many days you spent here. It is about ties.

Severing Residential Ties

Residency is decided by the same test all year round, so it is worth reading the Canadian tax residency rules next to this section. CRA looks at primary ties first:

A home available to you in Canada
A spouse or common law partner in Canada
Dependants in Canada

Then at secondary ties, which matter as a group rather than individually: bank accounts, credit cards, a driver’s licence, provincial health coverage, club memberships, a vehicle, professional memberships, and where your personal property sits.

You generally become a non resident on the latest of the day you leave, the day your spouse and dependants leave, and the day you become a resident of the new country. Which is why the person who moves in March, leaves the family in Vancouver until the school year ends in June, and rents out the house in July has a much less obvious departure date than they assume.

Keeping a bank account and a driver’s licence will not, on their own, make you a resident. Keeping a house available for your use, with your family in it, almost certainly will.

Why the Date You Choose Matters

Your departure date sets the valuation date for everything you are deemed to have sold. Move it three months and every number changes.

That creates real planning room:

If you are sitting on large unrealized gains, an earlier date in a down market can cut the bill substantially.
If you are sitting on unrealized losses, those losses are also triggered, and can offset gains in the same year. Sometimes it is worth realizing gains deliberately before departure to use them.
Your final year is a part year of Canadian residency, so your Canadian income is lower, and your marginal rate may be lower too. Bunching income into that year is sometimes very efficient, sometimes exactly wrong. It depends on the new country’s rules.

Do not decide this in isolation from where you are going. A departure date that saves you $30,000 in Canada can cost you more than that in the destination country if it lands you in their tax net earlier.

The Deemed Disposition: What Is Caught and What Is Not

Asset	Deemed disposition on departure?
Stocks, ETFs, mutual funds in a non registered account	Yes
Cryptocurrency	Yes
Shares of a private corporation, including your own company	Yes
Foreign real estate	Yes
Art, jewellery, collectibles, precious metals	Yes
Canadian real estate	No
RRSP, RRIF, TFSA, RESP, RDSP	No
Canadian resource and timber property	No
Business property used in a Canadian permanent establishment	No
Employee stock options	No, taxed under their own rules

While you were still resident, foreign assets over $100,000 had their own annual filing, explained in our guide to reporting foreign property on form T1135, and your final year is no exception. There is one more exclusion worth knowing, because it saves newcomers a great deal of money. If you were a resident of Canada for 60 months or less during the 10 years before you leave, property you owned when you arrived (or inherited after arriving) is not subject to deemed disposition. This is the short stay exemption, and it means a professional who came on a three year assignment and leaves does not get taxed on the appreciation of assets they brought with them. If you are on the other side of that move, our guide to filing your first tax return as a newcomer to Canada covers the arrival side.

The one that surprises business owners: shares of your own private corporation are caught. If you built a company worth $4,000,000 with a nominal cost base, leaving Canada triggers tax on essentially the whole value. That is a seven figure problem that needs to be solved before you book flights, not after. Start with how to value a business in Canada, then check whether the lifetime capital gains exemption or a holding company structure changes the picture.

What Happens to Each of Your Accounts

RRSP and RRIF

You keep it. There is no deemed disposition, no forced collapse, and the plan keeps growing tax sheltered as far as Canada is concerned.

When you withdraw as a non resident, Canada applies Part XIII withholding tax of 25% on the payment, and that is generally your final Canadian tax obligation. No Canadian return required for it. A tax treaty may reduce the rate on periodic pension payments (for residents of the United States, for instance, periodic payments from a RRIF are typically withheld at 15%, while a lump sum stays at 25%).

That gap between 25% and 15% is a real planning opportunity. Converting to a RRIF and taking periodic payments instead of a lump sum can cut the Canadian tax on the same money by 40%, if your treaty and your circumstances support it.

TFSA and Why You Must Stop Contributing

You can keep the TFSA and the income inside it stays untaxed in Canada. You can withdraw with no Canadian tax.

Three things you have to know:

Do not contribute while non resident. Contributions made as a non resident are hit with a tax of 1% per month on the amount, every month, until you withdraw it or become a resident again.
No new room accrues for years you are non resident.
Withdrawn amounts do not restore room until you become a resident again.

And the bigger issue Canada cannot help you with: many countries do not recognize the TFSA as a tax shelter. The United States is the classic example, where a TFSA can be treated as a foreign trust with onerous reporting. In many cases the right move is to close the TFSA before you leave, while withdrawals are clean and the room comes back. Check the destination country’s treatment first.

Non Registered Investments

This is the account where the departure tax actually lands. Everything is deemed sold at fair market value on your departure date, and gains are taxed.

Practical points:

Get written valuations for anything not publicly traded. Private shares, real estate abroad, art. Your future self will need them, and our business valuation services produce the kind of report CRA accepts.
Losses are triggered too, and can offset gains in the same year.
Crypto sits in the same net as your brokerage account and is valued on the departure date. Our guide to Canada crypto taxes and reporting covers how the gain is worked out.
After departure, your Canadian broker may be unable to keep your account depending on where you are moving. Sort this out before you go, not from a different time zone.

Canadian Real Estate You Keep

Not subject to departure tax, but it comes with obligations that start immediately. Covered below.

Your Final Canadian Tax Return

Reporting the Departure Date

Your final return is a part year return. You enter your date of departure on page 1 in the Residence Information section, and you report worldwide income up to that date, and only Canadian source income after it.

Your personal credits are prorated for the part of the year you were resident. Provincial tax is based on where you lived on your departure date, which for a BC resident means BC rates on the whole final year.

The return is due April 30 of the following year, or June 15 if you or your spouse were self employed, though any balance owing is still due April 30. Those dates sit alongside every other tax deadline in Canada for 2026, and if you have always had someone else do it, our walkthrough on how to file personal tax returns in Canada is the place to start.

Hands reviewing financial forms for a departure tax filing

Forms T1161 and T1243

Two forms that people file late, or not at all, at real cost:

Form	When required	Why it matters
T1161 List of Properties by an Emigrant	If the total fair market value of all property you owned on departure was more than $25,000	Late filing penalty of $25 a day, minimum $100, maximum $2,500. Applies even if you owe no tax and even if no return is required
T1243 Deemed Disposition of Property by an Emigrant	To report the deemed sale and calculate the gain or loss	Results carry to Schedule 3 of your return

The $25,000 test for T1161 excludes personal use property worth under $10,000 each and your registered plans, but it is a low bar and most people who owned a car and an investment account clear it easily. File it. The penalty is pure waste, and it stacks on top of the ordinary penalties for late filing of personal taxes in Canada.

Electing to Defer the Tax (Form T1244)

You do not have to pay departure tax in the year you leave. Form T1244 lets you defer payment until you actually dispose of the property, regardless of the amount, and no interest accrues during the deferral period.

The condition: if the federal tax owing on the deemed disposition is more than $16,500 (or $13,777.50 for former Quebec residents), you have to provide adequate security to CRA. That usually means a letter of credit from a bank, or a charge against acceptable assets. Arranging it takes time, so start early.

The election is due by April 30 of the year following your emigration.

When is deferral the right call?

Situation	Deferral usually
You have cash and the gain is modest	Not worth the paperwork, just pay
Large gain on private company shares you are not selling soon	Strongly worth it
You expect to return to Canada within a few years	Very worth it, since you may be able to unwind the whole thing
The asset might drop in value before you sell	Worth it, and there is relief available if it does

Modern apartment building kept as a Canadian rental property

If You Keep a Canadian Rental Property: NR6, NR4 and the 25% Withholding

This catches more emigrants than departure tax itself, because it starts the month you leave and it is easy to miss. The underlying rules on taxing rental income in Canada do not change, only who sends money to CRA and when.

Once you are a non resident, your tenant or property manager must withhold 25% of the gross rent and remit it to CRA by the 15th of the following month. Gross, not net. On $3,000 a month of rent, that is $750 sent to CRA every month regardless of your mortgage, taxes, insurance or repairs. For most leveraged rentals, that is far more than the tax actually owed.

The fix is Form NR6. You and a Canadian agent file it, and once approved, withholding applies to net rental income after expenses instead of gross, which makes it worth knowing exactly which rental property deductions every owner should know you are entitled to claim. File it on or before January 1 of each year, or before the first rental payment is due.

Then the reporting:

Your agent issues an NR4 slip showing gross rent and tax withheld.
You file a section 216 return to report net rental income and recover excess withholding. Normally you have two years from the end of the year to file it. But if NR6 was approved for the year, the section 216 return is due June 30 of the following year, and missing that deadline can retroactively make the full 25% gross withholding stick.

That last point is the trap. NR6 gives you better cash flow and a harder deadline. Take the deal, but calendar the deadline.

If you eventually sell the Canadian property as a non resident, there is a separate clearance process with its own withholding, and it will hold up your closing funds if it is not started early. Our guide to selling Canadian property as a non resident covers exactly how the section 116 clearance works and how long it takes.

Leaving within the next year? The difference between a well planned departure and an unplanned one is routinely five or six figures, and almost all of it comes down to the departure date, what you sell before it, and whether you file the elections on time. At Maxpro Financials we build departure plans for people leaving Canada, including business owners with private company shares. Book a free initial consultation while you still have options.
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Coming Back Later: The Step Up on Re Entry

The mirror image of departure tax is a genuine benefit. When you become a Canadian resident again, you are deemed to have acquired your property at fair market value on that date. Growth that happened while you were away is simply outside the Canadian tax system.

So if you leave with $500,000 of investments, pay departure tax on the gain to that point, and return eight years later with $1,200,000, Canada does not tax that $700,000 of growth. Your cost base resets on the way in.

There is also relief for people who come back holding the same property they were deemed to have sold. You can generally elect to unwind the original deemed disposition, effectively reversing the departure tax on property you still own. That is a strong argument for filing T1244 and deferring rather than paying, if there is any real chance you will return.
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Frequently Asked Questions

Do I need to tell CRA I am leaving?

Yes, by entering your departure date on your final return. Filing form NR73 for a residency determination is optional and often unnecessary. Get it wrong in the other direction and you also want to tell CRA promptly if you will not be filing a return at all.

What if I keep a bank account and a driver’s licence?

Those are secondary ties. On their own they rarely make you a resident. A home available for your use in Canada, or a spouse and children still living here, are the ties that actually decide the question.

Does a tax treaty change the outcome?

It can change which country taxes what and it can reduce withholding rates, and treaty tie breaker rules can settle residency when both countries claim you. What a treaty generally does not do is cancel departure tax itself. Some treaties, including the Canada United States treaty, let you elect a matching step up in the new country so you are not taxed twice on the same gain.

What if I leave partway through the year?

That is the normal case. You file a part year return, report worldwide income up to your departure date and Canadian source income after, and your personal credits are prorated.

Can I keep my TFSA if I leave Canada?

Yes, and it stays tax free in Canada. But do not contribute while non resident (1% per month penalty), no new room accrues, and your new country may tax it anyway. Closing it before departure is often the cleaner answer.

What happens to my RRSP if I move abroad?

Nothing immediately. It keeps growing tax sheltered. Withdrawals face 25% Canadian withholding, potentially reduced by treaty for periodic payments. There is no requirement to collapse it and usually no reason to.

Do I pay departure tax on my house?

No. Canadian real property is excluded from deemed disposition. But if you keep it and rent it out, the 25% withholding rules kick in, and when you eventually sell it as a non resident, the section 116 clearance process applies and any gain after departure is taxable in Canada. The principal residence exemption only shelters the years it genuinely was your principal residence, and if the home is in BC and sits empty, the vacancy tax in BC applies at the higher non resident rate.

What about my CPP and OAS?

You keep what you have earned. CPP is payable to non residents. OAS depends on how long you lived in Canada, and 20 years of residency after age 18 generally lets you keep receiving it abroad. Both are subject to non resident withholding, often reduced by treaty.

Do I lose my Canadian citizenship or PR status?

Citizenship, no. Tax residency and immigration status are completely separate systems. Permanent resident status has its own residency obligations that have nothing to do with CRA, and being a non resident for tax while trying to maintain PR is a real tension worth getting advice on.

When is the departure tax actually due?

With your final return, so April 30 of the following year, unless you file T1244 to defer. Deferral costs no interest, but requires security if federal tax on the deemed disposition exceeds $16,500.

Planning a Move Abroad? Plan the Tax First

Almost nobody plans their departure tax. They plan the move, the job, the school, the shipping container, and then in the following spring they discover that leaving Canada was a taxable event.

The decisions that actually move the number are all made before you go: which date you sever ties, what you sell first, whether to close the TFSA, whether the corporation should be restructured, whether to file T1244 and post security, and how the destination country will treat everything you carry over.

At Maxpro Financials we prepare final returns and departure filings, value and report deemed dispositions, set up NR6 and section 216 reporting for Canadian rentals, and work with business owners on the private company share problem that catches so many entrepreneurs on the way out. That work runs through our personal tax return filing service (T1) and, where a corporation is involved, our corporate tax return filing service (T2).

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